INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Sale proceeds of shares -

Assessee declared long-term capital gains earned on sales of shares as exempt under section 10(38). AO based on information emanated from investigation wing treated sale proceeds of shares as transactions entered into penny stocks in the form of accommodation entries and thus made addition of entire sale proceedings of shares under section 68. Held: Assessee purchased shares by way of off-market preferential allotment and payment was made by account payee cheque through assessee's bank account, copy of which was filed. Assessee has also filed application made for purchase of shares. The shares duly appeared in D-Mat account held by assessee with his wife jointly with HDFC Bank Ltd. These shares were sold by assessee from 1-10-2013 to 8-10-2013 and he received sale proceeds. The sale was carried out on the exchange and contract notes were also there supporting sale of shares. STT was also duly paid. Accordingly, transactions were genuine and, therefore, AO was not justified in making addition under section 68.

Followed:ITA No. 6249/M/2018 assessment year 2014-15 and Mukesh B. Sharma v. ITO vide Order, dated 29-5-2019.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

INCOME TAX ACT, 1963

Rule 34(5)(c)

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